Nickel: AI needs human support for digital asset investment process
Institutional investors and wealth managers would welcome the use of AI in digital asset investment processes as long as they retain human oversight on decisions, new global research from London-based Nickel Digital Asset Management (Nickel) shows.
Nearly nine out of 10 (86%) would be comfortable using AI investment processes subject to human oversight including a third (32%) who would be very comfortable, the study with senior executives found. Just 1% would be uncomfortable while the rest are neutral on the issue.
The study across the US, UK, UAE, Germany, Switzerland, France, Italy, the Netherlands, Singapore, Brazil and the Nordics found almost all use AI in digital asset research, risk management and portfolio oversight to some extent.
For a third (32%) AI is fully embedded in allocation and oversight while nearly half (46%) deploy AI across several investment or risk functions. Around one in six (16%) only use AI on a selective basis while 5% are only running pilot projects.
Organisations questioned are split on which part of the digital asset investment process will be transformed the most over the next two years with 21% opting for trading execution and market making while 20% chose market monitoring and real-time anomaly detection and the same number selecting risk management and stress testing.
Around 14% believe AI will have the most impact on portfolio construction and 10% on compliance and reporting. Manager selection and due diligence, and investor reporting and transparency were each selected by 5%.
There’s a similar divergence of views on what will do the most to increase institutional confidence in digital assets over the next two years, with more than a quarter (27%) identifying improved AI and technology-related risk management as the key factors.
However 23% believe regulatory clarity will have the most impact while 22% point to better custody and insurance and 21% to greater liquidity and market depth. Lower volatility was chosen by just 2%.
